Back when he was running for president in 2008, Barack Obama insisted that medical marijuana was an issue best left to state and local governments. "I'm not going to be using Justice Department resources to try to circumvent state laws on this issue," he vowed, promising an end to the Bush administration's high-profile raids on providers of medical pot, which is legal in 16 states and the District of Columbia.

But over the past year, the Obama administration has quietly unleashed a multi­agency crackdown on medical cannabis that goes far beyond anything undertaken by George W. Bush. The feds are busting growers who operate in full compliance with state laws, vowing to seize the property of anyone who dares to even rent to legal pot dispensaries, and threatening to imprison state employees responsible for regulating medical marijuana. With more than 100 raids on pot dispensaries during his first three years, Obama is now on pace to exceed Bush's record for medical-marijuana busts. "There's no question that Obama's the worst president on medical marijuana," says Rob Kampia, executive director of the Marijuana Policy Project. "He's gone from first to worst."

The federal crackdown imperils the medical care of the estimated 730,000 patients nationwide – many of them seriously ill or dying – who rely on state-sanctioned marijuana recommended by their doctors. In addition, drug experts warn, the White House's war on law-abiding providers of medical marijuana will only drum up business for real criminals. "The administration is going after legal dispensaries and state and local authorities in ways that are going to push this stuff back underground again," says Ethan Nadelmann, director of the Drug Policy Alliance. Gov. Lincoln Chafee of Rhode Island, a former Republican senator who has urged the DEA to legalize medical marijuana, pulls no punches in describing the state of affairs produced by Obama's efforts to circumvent state law: "Utter chaos."

In its first two years, the Obama administration took a refreshingly sane approach to medical marijuana. Shortly after Obama took office, a senior drug-enforcement official pledged to Rolling Stone that the question of whether marijuana is medicine would now be determined by science, "not ideology." In March 2009, Attorney General Eric Holder emphasized that the Justice Department would only target medical-marijuana providers "who violate both federal and state law." The next morning, a headline in The New York Times read OBAMA ADMINISTRATION TO STOP RAIDS ON MEDICAL MARIJUANA DISPENSERS. While all forms of marijuana would remain strictly illegal under federal law – the DEA ranks cannabis as a Schedule I drug, on par with heroin – the feds would respect state protections for providers of medical pot. Framing the Obama administration's new approach, drug czar Gil Kerlikowske famously declared, "We're not at war with people in this country."

That original hands-off policy was codified in a Justice Department memo written in October 2009 by Deputy Attorney General David Ogden. The so-called "Ogden memo" advised federal law-enforcement officials that the "rational use of its limited investigative and prosecutorial resources" meant that medical-marijuana patients and their "caregivers" who operate in "clear and unambiguous compliance with existing state law" could be left alone.

At the same time, Ogden was concerned that the feds not "be made a fool of" by illegal drug traffickers. In that vein, his memo advised U.S. attorneys to focus on going after pot dispensaries that posed as medicinal but were actively engaged in criminal acts, such as selling to minors, possession of illegal firearms or money-laundering. The idea, as Holder put it, was to raid only those hardcore traffickers who "use medical-marijuana laws as a shield."

The Ogden memo sent a clear message to the states: The feds will only intervene if you allow pot dispensaries to operate as a front for criminal activity. States from New Mexico to Maine moved quickly to license and regulate dispensaries through their state health departments – giving medical marijuana unprecedented legitimacy. In California, which had allowed "caregivers" to operate dispensaries, medical pot blossomed into a $1.3 billion enterprise – shielded from federal blowback by the Ogden memo.

The administration's recognition of medical cannabis reached its high-water mark in July 2010, when the Department of Veterans Affairs validated it as a legitimate course of treatment for soldiers returning from the front lines. But it didn't take long for the fragile federal detente to begin to collapse. The reversal began at the Drug Enforcement Agency with Michele Leonhart, a holdover from the Bush administration who was renominated by Obama to head the DEA. An anti-medical-marijuana hard-liner, Leonhart had been rebuked in 2008 by House Judiciary chairman John Conyers for targeting dispensaries with tactics "typically reserved for the worst drug traffickers and kingpins." Her views on the larger drug war are so perverse, in fact, that last year she cited the slaughter of nearly 1,000 Mexican children by the drug cartels as a counterintuitive "sign of success in the fight against drugs."

In January 2011, weeks after Leonhart was confirmed, her agency updated a paper called "The DEA Position on Marijuana." With subject headings like THE FALLACY OF MARIJUANA FOR MEDICINAL USE and SMOKED MARIJUANA IS NOT MEDICINE, the paper simply regurgitated the Bush administration's ideological stance, in an attempt to walk back the Ogden memo. Sounding like Glenn Beck, the DEA even blamed "George Soros" and "a few billionaires, not broad grassroots support" for sustaining the medical-marijuana movement – even though polls show that 70 percent of Americans approve of medical pot.

Almost immediately, federal prosecutors went on the attack. Their first target: the city of Oakland, where local officials had moved to raise millions in taxes by licensing high-tech indoor facilities for growing medical marijuana. A month after the DEA issued its hard-line position, U.S. Attorney Melinda Haag warned the city that the feds were weighing "criminal prosecution" against the proposed pot operations. Abandoning the Ogden memo's protections for state-sanctioned "caregivers," Haag effectively re-declared war on medical pot. "We will enforce the Controlled Substances Act vigorously against individuals and organizations that participate in unlawful manufacturing and distribution activity involving marijuana," she wrote, "even if such activities are permitted under state law." Haag's warning shot had the desired effect: Oakland quickly scuttled its plans, even though the taxes provided by the indoor grows could have single-handedly wiped out the city's $31 million deficit.

Two months later, federal prosecutors in Washington state went even further, threatening state employees responsible for implementing new regulations for pot dispensaries. U.S. attorneys sent a letter to Gov. Christine Gregoire, warning that state employees "would not be immune from liability under the Controlled Substances Act." Shocked by the threat – "It subjected Washington state employees to felony criminal prosecution!" – Gregoire vetoed the new rules. A similar federal threat in Rhode Island forced Chafee to follow suit, putting an indefinite hold on the planned opening of three state-licensed "compassion centers" to distribute marijuana to seriously ill patients.

In isolation, such moves might be seen as the work of overzealous U.S. attorneys, who operate with considerable autonomy. But last June, the Justice Department effectively declared that it was returning to the Bush administration's hard-line stance on medical marijuana. James Cole, who had replaced Ogden as deputy attorney general, wrote a memo revoking his predecessor's deference to states on the definition of "caregiver." The term, Cole insisted, applied only to "individuals providing care to individuals with cancer or other serious illnesses, not commercial operations cultivating, selling or distributing marijuana." Pot dispensaries, in short, were once again prime federal targets, even if they were following state law to the letter. "The Cole memo basically adopted the Bush policy," says Kampia, "which was only that the Justice Department will not go after individual patients."

In reality, however, the Obama administration has also put patients in the cross hairs. Last September, the Bureau of Alcohol, Tobacco and Firearms moved to deprive Americans who use medical marijuana of their gun rights. In an open letter to gun sellers, the ATF warned that it is unlawful to sell "any firearm or ammunition" to "any person who uses or is addicted to marijuana, regardless of whether his or her state has passed legislation authorizing marijuana use for me dicinal purposes." If your doctor advises you to use medicinal pot, in other words, you can no longer legally own a gun. Hunting advocates were outraged. Sen. Jon Tester, a Democrat from Montana, wrote a furious letter calling on the Justice Department to reassess its "chilling" policy, declaring it "unacceptable that law-abiding citizens would be stripped of their Second Amendment rights."

Since the federal crackdown began last year, the DEA has raided dozens of medical-cannabis dispensaries from Michigan to Montana. Haag, the U.S. attorney for Northern California, claims the federal action is necessary because the state's legalized pot dispensaries have been "hijacked by profiteers" who are nothing more than criminals.

It's true that California has no shortage of illegal pot dealers. Nonmedical marijuana is the state's largest cash crop, raking in an estimated $14 billion a year. And demand is growing, in part because former governor Arnold Schwarzenegger thwarted a ballot measure aimed at full legalization in 2010 by removing criminal penalties for possession of up to an ounce of pot. But instead of focusing limited federal resources on off-the-grid growers in places like Humboldt County, who are often armed and violent, Haag targeted Matthew Cohen, a medical-marijuana farmer in Mendocino who was growing 99 plants under the direct supervision of the county sheriff. As part of a pioneering collaboration with local law enforcement, Cohen marked each of his plants with county-supplied tags, had his secured facility inspected and distributed the mari­juana he grew directly to patients in his nonprofit collective.

Cohen appeared to be precisely the kind of caregiver that the Ogden memo advised should be given safe harbor for operating in "clear and unambiguous compliance with existing state law." But last October, DEA agents stormed Cohen's farm in the middle of the night and cut down his crop. Sheriff Tom Allman, who learned of the raid on his turf only an hour before it was executed, was outraged. "Matt Cohen was not in violation of any state or local ordinances when federal agents arrived at his location," Allman says. In January, Haag took the fight to the next level, threatening county officials like Allman with federal sanctions. Three weeks later, county supervisors voted to abandon the program to license and monitor Mendocino's legal growers. "This is a huge step backward," says Allman.

Haag's treatment of urban dispensaries has been equally ham-handed. She recently shuttered one of the oldest dispensaries in the state, a nonprofit that serves a high percentage of female patients in Marin County, which has the nation's highest rate of breast cancer. She has threatened to seize the properties that landlords rent to legal pot dispensaries. And in San Francisco, she targeted Divinity Tree, a cooperative run by a quadriplegic who himself relies on prescribed cannabis for relief from near-constant muscle spasms. At a time of high unemployment and huge budget deficits, the move killed more than a dozen jobs and deprived the state of $180,000 in annual tax revenue. In San Diego alone, the feds have shut down nearly two-thirds of the county's dispensaries. Statewide, the United Food and Commercial Workers Union estimates, the federal crackdown has destroyed some 2,500 jobs in California. It also sent street prices soaring by at least 20 percent, putting more money in the hands of actual criminals.

In addition, the federal war on medical marijuana has locked pot dispensaries out of the banking system – especially in Colorado, home to the nation's second-largest market for medicinal cannabis. Top banks – including Chase, Wells Fargo and Bank of America – are refusing to do business with state-licensed dispensaries, for fear of federal prosecution for money-laundering and other federal drug crimes. In a House hearing in December, Rep. Jared Polis of Colorado warned Attorney General Holder that strong-arming banks will actually raise the likelihood of crime. If pot dispensaries have to work outside the normal financial system, Polis told Holder, "it makes the industry harder for the state to track, to tax, to regulate them, and in fact makes it prone to robberies, because it becomes a cash business."

The IRS has also joined in the administration's assault on pot dispensaries, seeking to deny them standard tax deductions enjoyed by all other businesses. Invoking an obscure provision of the tax code meant to trip up drug kingpins, the IRS now maintains that pot dispensaries can deduct only one expense – ironically, the cost of the marijuana itself. All other normal costs of doing business – including employee salaries and benefits, rent, equipment, electricity and water – have been denied.

The agency has used the provision to go after Harborside Health Center, one of the largest and most respected providers of medical cannabis in California. Its Oakland branch, serving 83,000 patients in conforming with state law, paid more than $1 million in city taxes last year – placing it in the top 10 percent of local businesses. "It's incredibly tightly run and very, very professional," says Nadelmann of the Drug Policy Alliance. "But it's also big – and it may be that big is bad as far as the feds are concerned." Slapped with an IRS bill for $2.5 million in back taxes, Harborside now faces bankruptcy. "It's profoundly inaccurate to characterize us as a 'drug-trafficking' organization," says Harborside president Steve DeAngelo. "We are a nonprofit community-service organization that helps sick and suffering people get the medicine they need to be well. This is not an attempt to tax us – it's an attempt to tax us out of existence."

A medical marijuana advocate demonstrates outside the W Hotel where President Barack Obama is holding a fundraiser.Justin Sullivan/Getty Images

Supporters of medical mari­juana are baffled by Obama's abrupt about-face on the issue. Some blame the federal crackdown not on the president, but on career drug warriors determined to go after medical pot. "I don't think the federal onslaught is being driven by the highest levels of the White House," says Nadelmann. "What we need is a clear statement from the White House that federal authorities will defer to responsible local regulation."

The White House, for its part, insists that its position on medical pot has been "clear and consistent." Asked for comment, a senior administration official points out that the Ogden memo was never meant to protect "such things as large-scale, privately owned industrial marijuana cultivation centers" like the one in Oakland. But the official makes no attempt to explain why the administration has permitted a host of federal agencies to revive the Bush-era policy of targeting state-approved dispensaries. "Somewhere in the administration, a decision was made that it would be better to close down legal, regulated systems of access for patients and send them back to the street, back to criminals," says DeAngelo. "That's what's really at stake."

The administration's retreat on medical pot is certainly consistent with its broader election-year strategy of seeking to outflank Republicans on everything from free trade to offshore drilling. Obama's advisers may be betting that a tough-on-pot stance will shore up the president's support among seniors in November, as well as voters in Southern swing states like Virginia and North Carolina that are less favorable to drug reform. But the president could pay a steep price for his anti-pot crackdown this fall, particularly if it winds up alienating young voters in swing states like Colorado, where two-thirds of residents support medical mari­juana. In November, Colorado voters will likely consider a referendum to legalize all pot use for adults – and undercutting enthusiasm for the issue will only dampen turnout that could benefit the president. "Medical marijuana is twice as popular as Obama," notes Kampia. "It doesn't make any political sense."

The sharpest and most surprising rebuke to the administration has come from centrist governors who are fed up with the war on medicinal pot. In November, Gregoire and Chafee issued a bipartisan petition to the DEA, asking the agency to reclassify marijuana as a Schedule II drug, the same as cocaine and meth – one with a recognized medicinal value, despite its high potential for abuse. "It's time to show compassion, and it's time to show common sense," says Gregoire. "We call on the federal government to end the confusion and the unsafe burden on patients."

A petition by two sitting governors is historic – but it's unlikely to shift federal policy. Last June, after a nine-year delay, the Obama administration denied a similar petition. An official at the Department of Health and Human Services left little hope for reclassification, reiterating the Bush-era position that there is "no accepted medical use for marijuana in the United States."

For law-enforcement officials who handle marijuana on the front lines, such attitudes highlight how out of touch the administration has become. "Whether you call it medical or recreational, the marijuana genie is out of the bottle, and there's no one who's going to put it back in," insists Sheriff Allman of Mendocino, whose department had been targeted by federal prosecutors for its attempts to regulate medical pot. "For federal officials who plug their ears and say, 'No, it's not true, it's not true,' I have some words for them: You need to get over it."